Gregoire: Benefit hikes for state workers ‘budget busters’

Washington Gov. Chris Gregoire gives her State of the State address on Tuesday. (AP Photo/Ted S. Warren)

Increasing costs to pay for state employees’ retirement and health insurance are “budget busters,” Gov. Chris Gregoire said Tuesday as she urged the Legislature to “be bold” in dealing with Washington’s severe financial crisis.

During her annual state of the state address before a joint session of the House and Senate, the governor outlined her plans to address a $4.6 billion deficit: Reigning in government workers’ benefit costs, streamlining the education bureaucracy, transferring control of the ferry system to local authorities, having people pay more for state services they use and cutting unemployment insurance rates to kick-start the economy.

“Amid the worst economic climate in eight decades, our challenge is to actually transform Washington state government,” Gregoire said. “Voters sent us here to lead, to solve problems, to work together, to get things done and to be bold.”

Lawmakers, who convened the 105-day regular legislative session on Monday, have already slammed some of Gregoire’s previously-announced ideas – like letting local areas levy more taxes to pay for the financially-struggling Washington State Ferries. But in her speech, which was heavy with comparisons between the 1930s Great Depression and our current Great Recession, the governor implored the Legislature to make difficult choices to ensure that the state’s children will have opportunities in the future.

Gregoire highlighted pensions and health care costs.

“In the past decade our health care cots doubled to more than $5 billion. In the next biennium alone our pensions costs will double,” she said.

Gregoire wants the Legislature to repeal a 1995 law that gives automatic benefit increases to retirees in two state pension plans, calling the law “well intended, but it carries a staggering price tag we simply cannot afford.” The governor said pension reform would save $2 billion over the next four years. The governor also wants to keep health care inflation rates at 4 percent over the next 10 years.

“We must get a grip on these two budget busters. Unless and until we do, we cannot invest like we must in the education of our children,” Gregoire said.

The governor’s push to have people who use services – from ferries to parks – pay more is one of the most controversial aspects of her proposed budget. The governor addressed those concerns.

“Why…do we assume all taxpayers should pay for programs that benefit a few? Should a small business owner in Spokane pay the cost of processing a water right for a landowner in the Yakima Valley?” she asked. “Let’s adopt a user pays policy so that when only a few benefit from the service, they pay for it.”